Full Judgment Text
Neutral Citation Number : 2023:DHC:3623-DB
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Date of Decision: 17 May, 2023
+ RFA(OS)(COMM) 9/2018
M/S GREEN FACADE SOLUTIONS
PVT LTD ..... Appellant
Through: Mr. Ishan Khanna and Mr.
Rounak Singh, Advs.
versus
M/S ODEON BUILDERS PVT LTD ..... Respondent
Through: Mr. Rarunesh Tandon, Mr.
Rahul Chanhan and Mr.
Anurag Yadav, Advs.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MR. JUSTICE AMIT MAHAJAN
AMIT MAHAJAN, J.
1. The present appeal, under Section 13 of the Commercial
Courts Act, 2015, has been filed challenging the order dated
19.02.2018, passed by the learned Single Judge in CS (Comm)
No. 916 of 2016 (hereafter ‘ the impugned order ’). The learned
Single Judge, by way of the impugned order, rejected the plaint
and dismissed the suit instituted by the plaintiff / appellant
(herein), for recovery of ₹2,54,73,672/- along with interest.
2. The appellant is engaged in the business of aluminium
fabrication and is also the supplier and installer of aluminium
facades for all types of residential as well as commercial projects.
3. It claims that the work orders were received from the
defendant / respondent (herein) in respect of various works to be
executed at (a) Agro Mall, Rohtak; (b) OPD, Rohtak; (c) ITI,
Rohtak; (d) CSOI Club, Delhi; (e) Soulstice Educational,
Gurgaon; (f) Rewari; (g) Maandi Farm, Delhi; and, (h) Club
House. However, full payments were not made by the defendant
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which led to the plaintiff filing the suit for recovery of the
outstanding amount. The summons were issued and the pleadings
were stated to be complete.
4. The defendant filed an application being I.A. No. 1544 of
2017 under Order VII Rule 11 of the Code of Civil Procedure,
1908 (hereafter ‘ the CPC ’) for rejection of the plaint. The
pleadings in the said application were also stated to be complete.
5. The application, however, was pending and the matter was
listed before the learned Joint Registrar for completion of
pleadings in the pending applications and for filing of their
respective affidavits of admission / denial of documents.
6. The matter was listed on 10.01.2018, before the learned
Joint Registrar, wherein it was noted that the affidavit of
admission / denial was filed by the plaintiff; however, the
defendant sought further time for filing an affidavit of admission
/ denial and a last opportunity was granted to the defendant for
filing the same.
7. Since the pleadings with respect to the pending
applications were complete, the matter was put up before the
Court on 19.02.2018. On the said date, the learned Single Judge
decided the application under Order VII Rule 11 of the CPC and
passed the impugned order, which led to filing of the present
appeal.
8. Learned counsel for the appellant submits that the plaint
could not have been rejected on the principles of Order VII Rule
11 of the CPC. He submits that for the purpose of deciding an
application under Order VII Rule 11 of the CPC, the averments
made in the plaint are to be taken as correct. The Court is to
decide the application by taking all the averments made in the
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plaint to be true. It has to reach a conclusion that no cause of
action is made out only on the basis of averments made in the
plaint.
9. He submits that in the present case, the Court has gone into
the merits of the dispute and has rejected the plaint on grounds
which are alien for the purpose of consideration of an application
under Order VII Rule 11 of the CPC.
10. He submits that one of the grounds taken by the learned
Single Judge is that the plaintiff has not filed any document from
which the plaintiff can prove its claim in trial.
11. The Court has gone into the correctness of the documents
filed along with the plaint, which it is argued, could not have
been done at the stage of deciding an application under Order VII
Rule 11.
12. He further submits that the admission / denial was yet to be
done by the defendant and therefore, in the absence of any denial
of the documents filed by the plaintiff, the learned Single Judge
could not have commented on the said documents.
13. Learned counsel for the respondent submits that the
learned Single Judge, after having carefully perused the plaint as
well as the documents in support of the plaint, has rightly reached
the conclusion, that the suit was required to be disposed of
summarily.
14. He further submits that there is no cause of action in
favour of the plaintiff and no document has been filed, which
would show that any amount was payable by the defendant.
Conclusion
15. The law in relation to the consideration of application filed
under Order VII Rule 11 of the CPC is well settled. For the
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purpose of deciding an application under Order VII Rule 11 of
the CPC, only the averment in the plaint and the documents filed
with the plaint are to be considered and the said documents are
believed to be correct for the purpose of ascertaining whether the
cause of action exists.
16. The Hon’ble Apex Court in Liverpool & London S.P. & I
Assn. Ltd. v. M.V. Sea Success I & Anr. : (2004) 9 SCC 512 ,
held as under:
“139. Whether a plaint discloses a cause of action or not is
essentially a question of fact. But whether it does or does
not must be found out from reading the plaint itself. For
the said purpose the averments made in the plaint in their
entirety must be held to be correct. The test is as to
whether if the averments made in the plaint are taken to be
correct in their entirety, a decree would be passed.”
17. In D. Ramachandran v. R.V. Janakiraman & Ors. :
(1999) 3 SCC 267, the Hon’ble Apex Court held that:
“8. We do not consider it necessary to refer in detail to any
part of the reasoning in the judgment; instead, we proceed to
consider the arguments advanced before us on the basis of
the pleadings contained in the election petition. It is well
settled that in all cases of preliminary objection, the test is to
see whether any of the reliefs prayed for could be granted to
the appellant if the averments made in the petition are proved
to be true. For the purpose of considering a preliminary
objection, the averments in the petition should be assumed to
be true and the court has to find out whether those averments
disclose a cause of action or a triable issue as such. The
court cannot probe into the facts on the basis of the
controversy raised in the counter.”
18. It is not in dispute that the defendant was yet to file an
affidavit for admission / denial of documents, filed by the
plaintiff. Therefore, without there being any affidavit of such
nature, no enquiry could have been initiated by the learned Single
Judge to get into the veracity of the documents filed, even if the
same were photocopies.
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19. Moreover, the enquiry, which the Court is required to
conduct while examining the application under Order VII Rule
11 of the CPC, should not be in a way of a detailed examination
of the documents filed in support of the plaint. The averments
made in the plaint are to be taken as correct.
20. It is true that after the trial, if the plaint is not found to be
supported with the adequate evidence, it is within the power of
the Court to dismiss the suit. The Court is also within its power
to impose appropriate cost on the plaintiff.
21. It is also significant that the learned Single Judge, while
dismissing the suit, held that “ The plaintiff, in the present case is
found to have failed to place any pleading or material before this
Court on the basis of which it can be said that plaintiff has any
prospect of succeeding .”
22. It appears that the exercise undertaken by the learned
Single Judge was the one as envisaged under Order XIII-A of the
CPC.
23. Order XIII-A of the CPC reads as under:
“ORDER XIII-A
SUMMARY JUDGMENT
1. Scope of and classes of suits to which this order applies.—
(1) This order sets out the procedure by which Courts may
decide a claim pertaining to any Commercial Dispute without
recording oral evidence.
(2) For the purposes of this Order, the word “claim” shall
include—
(a) part of a claim;
(b) any particular question on which the claim (whether in
whole or in part) depends; or
(c) a counter-claim, as the case may be.
(3) Notwithstanding anything to the contrary, an application
for summary judgment under this Order shall not be made in a
suit in respect of any Commercial Dispute that is originally filed
as a summary suit under Order XXXVII.
2. Stage for application for summary judgment.—An applicant
may apply for summary judgment at any time after summons has
been served on the defendant:
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Provided that, no application for summary judgment may be
made by such applicant after the court has framed the issues in
respect of the suit.
3. Grounds for summary judgment.—The court may give a
summary judgment against a plaintiff or defendant on a claim if
it considers that—
(a) the plaintiff has no real prospect of succeeding on the claim
or the defendant has no real prospect of successfully
defending the claim, as the case may be; and
(b) there is no other compelling reason why the claim should not
be disposed of before recording of oral evidence.
4. Procedure.—(1) An application for summary judgment to a
court shall, in addition to any other matters the applicant may
deem relevant, include the matters set forth in sub-clauses (a) to
(f) mentioned hereunder:—
(a) the application must contain a statement that it is an
application for summary judgment made under this Order;
(b) the application must precisely disclose all material facts and
identify the point of law, if any;
(c) in the event the applicant seeks to rely upon any
documentary evidence, the applicant must,—
(i) include such documentary evidence in its application,
and
(ii) identify the relevant content of such documentary
evidence on which the applicant relies;
(d) the application must state the reason why there are no real
prospects of succeeding on the claim or defending the claim,
as the case may be;
(e) the application must state what relief the applicant is seeking
and briefly state the grounds for seeking such relief.
(2) Where a hearing for summary judgment is fixed, the
respondent must be given at least thirty days' notice of:—
(a) the date fixed for the hearing; and
(b) the claim that is proposed to be decided by the Court at such
hearing.
(3) The respondent may, within thirty days of the receipt of
notice of application of summary judgment or notice of hearing
(whichever is earlier), file a reply addressing the matters set
forth in clauses (a) to (f) mentioned hereunder in addition to any
other matters that the respondent may deem relevant:—
(a) the reply must precisely—
(i) disclose all material facts;
(ii) identify the point of law, if any; and
(iii) state the reasons why the relief sought by the
applicant should not be granted;
(b) in the event the respondent seeks to rely upon any
documentary evidence in its reply, the respondent must—
(i) include such documentary evidence in its reply; and
(ii) identify the relevant content of such documentary
evidence on which the respondent relies;
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(c) the reply must state the reason why there are real prospects
of succeeding on the claim or defending the claim, as the
case may be;
(d) the reply must concisely state the issues that should be
framed for trial;
(e) the reply must identify what further evidence shall be
brought on record at trial that could not be brought on
record at the stage of summary judgment; and
(f) the reply must state why, in light of the evidence or material
on record if any, the Court should not proceed to summary
judgment.
5. Evidence for hearing of summary judgment.—(1)
Notwithstanding anything in this Order, if the respondent in an
application for summary judgment wishes to rely on additional
documentary evidence during the hearing, the respondent
must:—
(a) file such documentary evidence; and
(b) serve copies of such documentary evidence on every other
party to the application at least fifteen days prior to the date
of the hearing.
(2) Notwithstanding anything in this Order, if the applicant for
summary judgment wishes to rely on documentary evidence in
reply to the defendant’s documentary evidence, the applicant
must:—
(a) file such documentary evidence in reply; and
(b) serve a copy of such documentary evidence on the
respondent at least five days prior to the date of the hearing.
(3) Notwithstanding anything to the contrary, sub-rules (1)
and (2) shall not require documentary evidence to be:—
(a) filed if such documentary evidence has already been filed; or
(b) served on a party on whom it has already been served.
6. Orders that may be made by Court.—(1) On an application
made under this Order, the court may make such orders that it
may deem fit in its discretion including the following:—
(a) judgment on the claim;
(b) conditional order in accordance with Rule 7 mentioned
hereunder;
(c) dismissing the application;
(d) dismissing part of the claim and a judgment on part of the
claim that is not dismissed;
(e) striking out the pleadings (whether in whole or in part); or
(f) further directions to proceed for case management under
Order XV-A.
(2) Where the Court makes any of the orders as set forth in
sub-rule (1)(a) to (f), the court shall record its reasons for
making such order.
7. Conditional order.—(1) Where it appears to the Court that
it is possible that a claim or defence may succeed but it is
improbable that it shall do so, the Court may make a conditional
order as set forth in rule 6(1)(b).
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(2) Where the Court makes a conditional order, it may:—
(a) make it subject to all or any of the following conditions:—
(i) require a party to deposit a sum of money in the Court;
(ii) require a party to take a specified step in relation to
the claim or defence, as the case may be;
(iii) require a party, as the case may be, to give such
security or provide such surety for restitution of costs
as the court deems fit and proper;
(iv) impose such other conditions, including providing
security for restitution of losses that any party is likely
to suffer during the pendency of the suit, as the Court
may deem fit in its discretion; and
(b) specify the consequences of the failure to comply with the
conditional order, including passing a judgment against the
party that have not complied with the conditional order.
8. Power to impose costs.—The Court may make an order for
payment of costs in an application for summary judgment in
accordance with the provisions of sections 35 and 35A of the
Code.”
24. It is apparent that the learned Single Judge has rendered
findings on some of the questions, which were under controversy
in the suit.
25. It is contended that it was not permissible for the learned
Single Judge to decide the issues without striking any issues and
without permitting the parties to lead evidence.
26. In terms of Order XIII-A Rule 2 of the CPC, the parties are
permitted to file an application for summary judgment at any
time after the summons are served on the defendant. It is,
however, no longer res integra, as is apparent from the language
of Order XIII-A of the CPC, that a summary judgment cannot be
rendered except pursuant to an application moved by a party. The
procedure for filing and disposal of such an application is
provided in Order XIII-A of the CPC.
27. Sub-rule 2 of Rule 4 under Order XIII-A of the CPC
specifically provides that the respondent is required to be given at
least 30 days prior notice of hearing of the application and the
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claims that are proposed, are to be decided by the Court.
28. The respondent is entitled, on receipt of such notice, to file
a reply to the specific matters as put forth in the said application.
The parties are also entitled to rely upon additional documentary
evidence.
29. The impugned order, from its plain language, appears to
have been passed as a summary judgment, however, without
following the procedure as set out in Order XIII-A of the CPC.
30. This Court, in a recent decision in the case of Surya Food
And Agro Limited v. Om Traders & Anr. : 2023/DHC/000494
has held that the procedure envisaged under Order XIII-A of the
CPC embodies the principle of natural justice, which is essential
for rendering a fair decision in any action.
31. The Court relied upon the judgment passed by the
coordinate Bench of this Court in Bright Enterprises Private Ltd.
& Anr. v. MJ Bizcraft LLP & Anr.: 2017 SCC OnLine Del 6394
where in it was held as under:
“ 21. Apart from this, we are of the view that the learned
Single Judge has gone wrong in invoking the provisions of
Order XIIIA CPC for rendering a summary judgment. It is true
that Rule 3 of Order XIIIA CPC empowers the Court to give a
summary judgment against a plaintiff or defendant on a claim if
it considers that - (a) the plaintiff has no real prospect of
succeeding on the claim or the defendant has no real prospect of
successfully defending the claim, as the case may be; and (b)
there is no other compelling reason why the claim should not be
disposed of before recording of oral evidence. But, in our view,
this power can only be exercised upon an application at any
date only after summons have been served on the defendant and
not after the Court has framed issues in the suit. In other words,
Order XIIIA Rule 2 makes a clear stipulation with regard to the
stage for application for summary judgment. The window for
summary judgment is after the service of summons on the
defendant and prior to the Court framing issues in the suit.
22. The provisions relating to summary judgment which
enables courts to decide claims pertaining to commercial
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disputes without recording oral evidence are exceptional in
nature and out of the ordinary course which a normal suit has to
follow. In such an eventuality, it is essential that the stipulations
are followed scrupulously otherwise it may result in gross
injustice. As pointed out above, a specific period of time has
been provided during which an application for summary
judgment can be made. That period begins upon the service of
summons on the defendant and ends upon the court framing
issues in the suit. Even if we were to accept, which we do not,
the argument of the respondents that the Court had suo
moto powers to deliver summary judgment without there being
any application, those powers also would have to be exercised
during this window, that is, after service of summons on the
defendant and prior to framing of issues. In addition to this, we
also reiterate that, in our view, a summary judgment under
Order XIIIA CPC is not permissible without there being an
appropriate application for summary judgment. The contents of
an application for summary judgment are also stipulated in Rule
4 of Order XIIIA. The application is required to precisely
disclose all material facts and identify the point of law, if any. In
the event, the applicant seeks to rely on any documentary
evidence, the applicant must include such documentary evidence
in its application and identify the relevant content of such
documentary evidence on which the applicant relies. The
application must also state the reason why there are no real
prospects of succeeding or defending the claim, as the case may
be.
23. Rule 4(2) of Order XIIIA also requires that where a
hearing for summary judgment is fixed, the respondent must be
given at least thirty days' notice of the date fixed for the hearing
and the claim that is proposed to be decided by the Court at
such hearing. Rule 4(3) of Order XIIIA makes provision which
enables the respondents to file a reply within the stipulated time
addressing the matters set forth in clauses (a) to (f) of the said
sub-rule. In particular, the reply of the respondent ought to
precisely disclose all the material facts and identify the point of
law, if any, and the reasons why the relief sought by the
applicant for summary judgment should not be granted. Just as
in the case of the applicant, the respondent is also given the
opportunity to rely upon documentary evidence in its reply
which must be included in the reply and the relevant content
identified. The respondent's reply is also required to give reason
as to why there are real prospects of succeeding on the claim or
defending the claim, as the case may be. Importantly, the reply
must also concisely state the issues that should be framed for
trial and that it must identify what further evidence would be
brought on record at trial that could not be brought on record at
the stage of summary judgment. The reply should also state as to
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why in the light of the evidence or material on record, if any, the
Court should not proceed to summary judgment.”
32. This Court had concurred with the view taken in the earlier
decision in Bright Enterprises Private Ltd. & Anr. v. MJ
Bizcraft LLP & Anr. ( supra ). It was explained that proceedings
before the Court are adversarial in nature and are not
inquisitorial.
33. It is not disputed that no application was filed by the
defendant under Order XIII-A of the CPC. The impugned order
was passed disposing of the application filed under Order VII
Rule 11 of the CPC, which as discussed above, was required to
be decided taking the averments made in the plaint as correct.
34. In our opinion, the learned Single Judge has decided the
application under Order VII Rule 11 of the CPC on the principles
as envisaged in Order XIII-A of the CPC, though in the absence
of any such application under the said order.
35. For the reasons stated above, the appeal is allowed. The
impugned order is set aside.
36. We clarify that this order will not preclude the respondent
from moving an appropriate application under Order XIII-A, if
otherwise such recourse is available in law.
37. All the contentions of the parties are reserved.
AMIT MAHAJAN, J
VIBHU BAKHRU, J
MAY 17, 2023
KDK
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